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Feb 23, 2016

Polygamous church leaders indicted, arrested for food stamp fraud

JESSICA MILLER The Salt Lake Tribune February 23, 2016

Lyle Jeffs, who has been running the polygamous Fundamentalist Church of Jesus Christ of Latter-Day Saints for his imprisoned brother, is one of nearly a dozen people who were indicted on food stamp fraud charges, the U.S. Attorney for Utah announced Tuesday.

The indictment was unsealed the same day FBI and sheriffs deputies searched businesses in Hildale, Utah, and Colorado City, Ariz., that are owned by members of the FLDS.

Also indicted was Seth Jeffs, brother to both Lyle and FLDS President Warren Jeffs, the religion's president and prophet, who is serving a sentence of up to life in prison plus 20 years in Texas for crimes related to marrying and sexually abusing underage girls.

Hildale and Colorado City, collectively known as Short Creek, are home to the FLDS church. Isaac Wyler, a former member of the church, said it appears to be the largest law enforcement raid in the towns since 1953, when Arizona authorities arrived to arrest polygamists.

"There are officers all over town," Wyler said.

Jeffs and a number of other FLDS Church leaders and members were arrested Tuesday in Utah and South Dakota, according to a news release from the U.S. Attorney's Office.

They are accused of conspiracy to commit Supplemental Nutrition Assistance Program (SNAP) benefits fraud, and conspiracy to commit money laundering, the new release states.

Prosecutors allege in the indictment that church leaders directed members to divert their SNAP benefits to the FLDS Storehouse, a communal clearinghouse that collects and distributes commodities to the community. The leaders also tell members that they must obtain their food and household commodities solely through the storehouse, the indictment alleges.

A large percentage of FLDS Church members living in Short Creek receive SNAP benefits, amounting to millions of dollars in benefits per year, the news release said.

"This indictment is not about religion. This indictment is about fraud," U.S. Attorney John W. Huber said in the news release. "This indictment charges a sophisticated group of individuals operating in the Hildale­-Colorado City community who conspired to defraud a program intended to help low ­income individuals and families purchase food."

In the physical absence of Warren Jeffs, Lyle Jeffshandles the daily affairs of the organization, including its financial matters, prosecutors said. Another of Warren Jeffs' brothers, Seth Jeffs, leads a congregation of FLDS members in rural Custer County, South Dakota. Arrest warrants were issued for all defendants charged in the indictment and at least five of those charged were in custody by mid-afternoon on Tuesday.

Washington County Sheriff Cory Pulsipher said Tuesday that his office helped initiate the investigation and has officers participating on the FBI's Public Corruption Task Force.

"What started as a small investigation quickly grew to a point where it was important to work with federal agencies to build a case to present to a grand jury," Pulsipher said in a statement.

Eric Barhart, Special Agent in Charge of the FBI's Salt Lake City Field Office, called Tuesday's indictment the "culmination of the tireless efforts" of the FBI task force, the U.S. Department of Agriculture's Office of Inspector General, the Washington County Sheriff's Office and the Washington County Attorney's Office.

"The violations included in the indictment are especially egregious since they allege that leaders of the conspiracy directed others to commit crimes, for which only certain people benefited," Barnhart said. "This type of conduct represents nothing less than pure theft. The FBI and its law enforcement partners will actively pursue those entities or persons who unlawfully manipulate and control government programs for their own gain."

Washington County Attorney Brock R. Belnap, whose office also participated in the investigation, will participate in prosecuting the case.

"I am grateful for the numerous partners who have worked diligently on this case," Belnap said. "It is our shared hope that this action will help innocent families receive the food assistance that they genuinely need while holding people accountable who conspire to divert those resources to illegal purposes."

KUTV showed video of Mohave County, Ariz., deputies blocking streets around a dairy retailer in Colorado City. Other witnesses told The Salt Lake Tribune that agents were at Reliance Electric, a longtime contributor to the FLDS, as well as a produce business.

The prosecutors' indictment says the alleged fraud is rooted in the FLDS Church's "United Order," instituted in 2011, which instructs all adherents to donate their lives and all their material substance to their church.

The community was instructed to divert their food stamp benefits to the church by purchasing food from church-owned businesses like the Meadowayne Dairy Store and Vermillion Cliffs Produce and then bring those items to the storehouse for "donation," according to the indictment.

"These leaders also provided instruction on how to avoid suspicion and detection by the government," the indictment alleges.

FLDS members were also told by leaders to transfer their SNAP benefits to the church-owned stores without receiving any food products, according to the indictment.

On one occasion, Wayman is accused of taking an EBT card — which operates similar to a debit card and is linked to a SNAP account — from a qualifying person and gave it to an unauthorized person to buy food and goods.

Prosecutors also allege that the proceeds from the SNAP fraud financed ineligible purposes, such as buying paper products, a tractor and a truck.

Blake Hamilton, an attorney who has represented Reliance and the dairy in the past, said in a text message he was only learning of the raid and had no comment. The church itself has no spokesperson.

The Short Creek searches come as the municipal governments in the towns are on trial in a Phoenix courtroom. The U.S. Department of Justice is suing the towns, claiming they discriminate against people who do not follow the FLDS. A jury could reach a verdict this week.

There has been testimony in that trial that families with food stamps would use their government-issued debit cards at retail stores operated by FLDS members. The stores would be reimbursed by the government but food would go to the FLDS storehouse, according to the testimony.

Lyle Jeffs and Wayman are expected to appear in the federal courthouse in Salt Lake City.

Seth Jeffs is due in a South Dakota courtroom and the remaining defendants arrested in the Hildale/Colorado City area will appear in the federal courthouse in St. George.

The potential penalty for conspiracy count is five years in prison. The money laundering count carries a potential penalty of 20 years in prison. This is the second time this month federal agents have raided Utah businesses associated with a polygamous sect. On Feb. 10, agents from the FBI, the IRS and the Environmental Protection Agency searched the Salt Lake County offices of Washakie Renewable Energy, which is operated by members of the Kingston Group.

The Kingstons and the FLDS are separate polygamous churches. There was no indication Tuesday the two raids were related.

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